ACHUTHAN: THIS IS A DEAD CAT BOUNCE

Lakshman Achuthan was on CNBC yesterday to discuss the outlook for the economy.  The head Economist of the ECRI predicted the slow-down that the economy is currently undergoing, but maintains that the recent uptick in data is a “dead cat bounce”.  Achuthan says this global industrial slow-down will be sustained and is likely just beginning.  He says:

“There’s some false hope that there is a rebound here in the economy or in global industrial sectors in the second half….The global industrial slowdown is going to be present through year-end,”

Achuthan says the long leading indicators are pointing to persistent slow-down and that the recent uptick in PMI’s (short leading indicators) will prove temporary:

Source: CNBC

 

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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Comments

  1. If that’s true, and it may well be, there’s better $$ to be made short commodities, than short the US big-caps.

  2. I actually agree. I got my own leading indicator of the economy – Retailers and how deep they cut. The sales over 4th of July where spectacular. I don’t remember anything like that even in 2008-2009. Big retailers do this “free with purchase” gift with cosmetics to attract buyers and the number of them this year reminds me 2000 when retailers had so much inventory and couldn’t move it. It looks like we are in the same situation now. This is a very bad sign.
    In 2008-2010 inventories were very lean, that was no fun. But this year, I am loving it. -))

  3. Once again, to me he sounds much more worried, comparing to market performance, than last summer. Looks like real contrarian indicator….

  4. Good discussion and analogy of the current situation. Except that socialist goals have no boundaries and we do have a socialist president and senate, and I’m not sure about the house!

    • @innertrader your missing the point. The problem with our economy is operational not political. Economic advisors are simply giving the wrong advice because they are using the wrong models. The objective is never to balance the budget. The objective is always to optimize the budget. Fiscal optimization at any level of public spending requires balancing tax revenues with spending while running deficits at a rate corresponding to currency users saving rate. Government debt of a currency issuer is the currency user’s savings as a matter of double entry accounting. It’s just a digital account corresponding to all currency users’ savings in banknotes, deposits, and treasuries. Optimization is nothing more than how to maximize throughput within a resource constrained marketplace. Nothing more. Nothing less. For those of you interested I’ve outlined a laymen’s explanation here – DollarMonopoly . com

    • innertrader you are dead wrong. If he was a “socialist” he would not be compromising on raising taxes on the rich or reducing benefits in social security or medicare. Unfortunately he’s not taking a stance with either side and that’s going to leave him with no votes next November. The Liberals and Independents have lost all respect. No sure who’s on his side now, but it’s certainly not the socialists.

  5. Achuthan’s comparison to trying to bounce a dead cat off the ground is an excellent desription of what Obama is trying to do with the economy. How in heaven’s name does this Administration think that we can rebuild an economy without a healthy manufacturing base? The government has to rebuild an enviornment that encourages industry to invest in infrastructure that allows making a reasonable return on the money they spend building factorys and hiring people.
    At present, our economy and related jobs are low paying, service jobs and we can’t maintain a decent standard of living with a service based economy. Fast food and related types of jobs, just doesn’t cut the mustard.